Problem:
On October 15, 2012, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2013, 23 million stock options were granted, exercisable for 23 million shares of Ensor's $1 par common stock. The options are exercisable between January 1, 2016, and December 31, 2018, at 90% of the quoted market price on January 1, 2013, which was $20. The fair value of the 23 million options, estimated by an appropriate option pricing model, is $6 per option. 2.3 million options were forfeited when an executive resigned in 2014. All other options were exercised on July 12, 2017, when the stock's price jumped unexpectedly to $22 per share. Required:
Required:
Question 1: When is Ensor's stock option measurement date? October 15, 2012 December 31, 2018 January 1, 2013 January 1, 2016
Question 2: Determine the compensation expense for the stock option plan in 2013. (Ignore taxes.) (Enter your answer in millions.)
Question 3: What is the effect of forfeiture of the stock options on Ensor's financial statements for 2014 and 2015?
Question 4: How should Ensor account for the exercise of the options in 2017?
Note: Please show the work not just the answer.